Will Murdoch Survive Brand Trashing?

Thu, 21 Jul 2011

News of the World has really lived up to its name - from a localised British tabloid it has shot to international news and notoriety in no time. Axing the newspaper (itself one of the UK's best selling newspapers) was presented as a sacrificial healing: removing a limb to save the body. However the fall-out from the phone hacking scandal is not being contained and actions taken thus far don't seem to be stopping the crisis from tainting the wider News Corp business, brands and Murdoch reputation.

Scope of the Brand Damage

The reputational damage to News Corp has been immense. Their market cap is down $9billion, and $1billion has been lost from Murdoch's personal wealth. It may impact the ambitions of News Corp, with the first victim being News' planned multi-billion-dollar purchase of BSkyB.

Damaging News Corp's Brand Ambitions

James Murdoch has immense ambitions for the News Corp brand. Last month he told a media conference that "The real issue [is that] we aren't big enough", in comparison with "monolithic brands like Google, Apple." Over the next decade New Corp planned on operating "at a much bigger scale." But this crisis is going to impact the expanding of News' horizons. In the UK and US political and regulatory bodies, shareholders and the public will be holding Murdoch and News Corp up to far higher scrutiny. It still remains to be seen whether James as head of News Corp will secure larger markets, or oversee their decline.

Recovery For This Brand Damage?

It's been a while since we've seen reputation damage on this scale. The last brand disaster of this scope was BP's Deepwater Horizon oil spilllast year. News Corp have reacted quite differently from BP to this. BP never scrapped their brand. They removed executive staff, and are riding out the immense damage self-inflicted to their brand.

News Corp may find that folding News of the World does not make them more accountable to either the public, or - importantly for this global media juggernaut - to regulatory bodies. Without a clear brand to confront, contain and work through the fall out there will be no sense of an organisation made to be accountable. This could leave a bitter after taste amongst the public and regulators who will be slow to forgive.